Interest on municipal securities included in net income in 2010 was $5,000.

Depreciation recognized in the tax return exceeded that in the financial statement income statement by $100,000. This temporary difference will reverse evenly during 2011 and 2012.

The company has accrued revenue of $10,000 in 2010 for financial reporting purposes, however the tax laws allow them to deferred showing this as a taxable revenue until 2011 when the cash will be collected.

Firm's pretax GAAP financial net income for 2010 was $300,000 and the company's income tax rate was 35%. This rate is scheduled to change to 40% for 2011 and 2012.

A. Prepare below a deferred income tax schedule for 2010. Showing all timing differences in the approriate year's column. Years 2010, 2011, and 2012.

2010 2011 2012

B. Prepare the general journal entry to accrue income taxes for 2010. Assume there was no prior balance in the company's deferred income tax account.